Health care costs are back in the news—because health care costs are on the rise again. U.S. health care spending grew 4.3% in 2016, reaching $3.3 trillion for 17.9% of the gross domestic product, or $10,348 per person (see National Health Expenditures 2016 Highlights).
There are many conflicting proposals for how best to “bend” the health care cost cure. One recent proposal that caught my attention came from the Texas Medical Center Health Policy Institute, which convened an expert panel to discuss the options. Their eight recommendations were reported in Reducing The Cost Of Health Care: Current Innovations & Future Possibilities—recommendations that will reduce health care costs by $1 trillion per year:
- Eliminate fee-for-service (FFS) payment. FFS payment has the wrong incentives (quantity of services) and a very high administrative cost.
- Reduce emergency room use and reduce readmissions. A host of studies have quantified the effects of preventable hospital readmissions (see 23% Of Hospital Admissions For Psychosis Resulted In Readmission Within 30 Days and Hospital Strategies To Decrease Readmission Rates)—and a number of value-based purchasing models are focused on providing incentives to reduce those readmissions.
- Empower consumers to be responsible for their own health and health care. Empowering and engaging consumers is the ultimate form of health care cost containment — both empowering good health behaviors and providing consumers with information to make smart health choices (see Social Risk & The ‘Value’ Of Health Care and More Community-Based Care + Consumer Empowerment = Self-Directed Care). The report cites a wide range of tactics including food labeling, health care price transparency, increased taxes on “bad” foods, and charging consumers with “bad behaviors” more for health insurance.
- Standardize performance metrics. While the field is moving forward with metrics to insure quality, most payers and provider organizations are moving forward with their own metrics. This is a huge expense and prevents comparative analysis of performance (for those of you at our 2018 OPEN MINDS Performance Management Institute, this was a big point of discussion at the town hall session, What Are Payers Looking For In Value-Based Partnerships? A Town Hall Discussion On What Payers Need From Provider Organization Partners – the need for standardized health plan performance measures for complex consumers).
- Meaningfully address the impacts of adverse childhood experiences. The effects of trauma have been tied to increased health care costs. Policymakers should focus on early childhood interventions to address trauma, and adopt trauma-informed care practices as preferred practices.
- Encourage task shifting, or the use of personnel at the “top of their practice.” Regulatory changes are needed to allow health plans to use staff at the top of their capabilities. Traditional rules limiting practice should be changed to reflect both new educational practices and new technology. FYI, the ultimate task shifting is to allow consumers and their caregivers to direct and access care resources themselves.
- Develop more specific approaches to improving end-of-life care, U.S. end-of-life care spending is high—and not always effective or preferred by consumers. Policies should change to encourage specific approaches like “advance directives” for living wills, power of attorney, and health care proxy—which have been shown to save $5,585 per consumer.
- Allow the government to use cost and cost-effectiveness in decision-making. Medicare and Medicaid should move to using “comparative effectiveness” in their coverage decisions (see Methods Guide For Effectiveness And Comparative Effectiveness Reviews) – like NICE in the U.K. (see NICE Quality Standard 80: Psychosis & Schizophrenia In Adults and NICE Revises Alzheimer’s Treatment Guidelines to Include Medications for Mild Disease State).
For the most part, none of these recommendations are new. But collectively, the recommendations would result in a major change in the spending patterns in the U.S. health care system. The move away from FFS and toward value-based payment arrangements that incentive prevention of readmissions and engagement of consumers is already underway (see Where Are We On The Path To Value-Based Reimbursement?). But these changes are happening within the 4,000 U.S. health plans, which make standardization of performance measures difficult. There has been some initial attempts at standardization, but that is certainly not the reality on the ground (see California Stakeholders Endorse Standardized Performance Measures For Commercial ACOs). The other recommendations will require policy resolve, changes in budget priorities, and legislative action. Increases in early childhood intervention budgets, revised regulations regarding the scope of practice for the wide array of health care professionals, legislative changes regarding end-of-life policies, and public plan coverage decisions based on comparative effectiveness are a tall order.
But I think this list a good preview of the future U.S. health care system. Whether these proposed changes are popular or not (depending on the various stakeholder perspectives in the field), the continued cost pressures will force even the most reluctant of legislators and policymakers to look at these solutions. The question for the executive teams of health and human service organizations—is your organization prepared for this future?
For more, be sure to join Charles Gross, Ph.D., Vice President, Behavioral Health, Anthem, Inc. on June 6 at The 2018 OPEN MINDS Strategy & Innovation Institute, for his plenary address, Going Beyond Innovation – Developing Partnerships With Health Plans. And for more from Dr. Gross, check out my recent conversation with him online: Coordination, Care & Value-Based Contracting.